Chile: Mixed supply- and demand-side activity data in December

Chile: Mixed supply- and demand-side activity data in December

Florencia Vazquez - Market Economics
Latam Macro Snapshot | 30 Jan 2013 14:04 |

Manufacturing activity was reported to have contracted 2.5% y/y in December, a result that disappointed both our forecast and the median estimate from the Bloomberg survey (0.8% and 1.0% y/y, respectively). Despite weak performance in recent months, manufacturing output managed to advance 2.4% last year.

Mining performance was also soft at -2.6% y/y last month, pushed lower by diminished copper production. In contrast, real retail sales advanced a strong 11% y/y in December. The reading stood above our forecast and the median estimate from the Bloomberg survey (7.7% and 8.4% y/y, respectively).

In all, partial December activity data looks consistent with a 4.8% y/y Imacec expansion. The monthly GDP proxy will be unveiled next week (on Tuesday). If this forecast materializes, real GDP would have advanced a robust 5.6% last year — a reading that stands exactly in line with our forecast.

Details:

-We estimate that manufacturing production contracted 2.2% m/m (sa) in December. According to INE’s press release, manufacturing activity was adversely affected by a lower number of working days in December this year. The sectors with the stronger performance in 2012 were those producing food and beverage, metal and paper goods. In December, basic metals, chemical goods and wood production stood out among the components with a negative performance (that together subtracted 3.9pp from the overall reading). In contrast, food and beverage and paper products contributed positively to last month’s reading. On a quarterly basis, the pace of advance of manufacturing production improved visibly to 4.6% q/q in Q4 (Chart 1).

-Mining production is estimated to have contracted 2.8% m/m (sa) last month. During 2012, mining activity expanded 2.7%.

-Overall industrial production (comprising manufacturing, mining and electricity, gas and water) contracted 2.1% y/y in December but expanded 2.9% in 2012. The largest contribution came from mining at 1.4pp. Manufacturing production also added 0.9pp to the overall expansion.

-Real retail sales kept a steadily strong performance in December, having expanded an estimated 1.6% m/m (sa). On a q/q (saar) basis, their pace of advance remained stellar at 12.1%. The divergence between supply- and demand-side performance thus continued in late 2012 (Chart 2).